How Product Unbundling Can Increase Revenue

As business owners, we are always thinking about more: How can we find more clients, add more value than competitors, and of course, earn more money?

One way to offer more is to bundle your offerings. But what if bundling doesn’t make sense for everyone in your audience? What if they don’t want more for less? What if they want less — and are willing to pay a small premium for the convenience of less?

Long gone are the days of the music industry forcing consumers to purchase an entire album. In fact, “single tracks are more popular than ever, but it’s albums that make money – and sales of full-lengths continue to slump.” With the advent of platforms like Spotify and iTunes, you’re free to build your music collection one song at a time. Meanwhile, media companies let you forego subscriptions in lieu of per-article pricing. And massive open online courses make it possible for students to take single lessons without the commitment of a degree program.

I’ve observed these industry changes over the past decade, both as an employee in product management for a Fortune 500 company, and as a strategic consultant helping organizations rethink their products. Today, as the owner of a business strategy company focused on product management, I advise clients to consider bundling (and unbundling) strategies.

Product unbundling strategies

Bundling can be a valuable part of product strategy, but it can limit your choices. By unbundling your products, you can give your audience what they want, while creating new revenue streams. Follow these five steps below to discover product unbundling opportunities for your business:

1. Inventory your offerings

Before you can break offerings into bite-sized pieces, get a firm grasp on your inventory. You might already have a tidy list or you can data from your e-commerce site. If things are a bit murky, sit down with your team and talk through everything you own and sell. During this step, don’t worry about decoupling: Just focus on documenting what you have.

2. Consider your audience

Next, carefully consider your audience’s needs. Why do they buy from you? What pain points are you helping them solve? If you haven’t already done the research to confidently know the answers to these questions, conduct a customer survey to help you better understand your audience and their needs.

For example, I worked with a micropayment platform that wanted to better understand consumer habits related to charitable donations — specifically micro-donations. After conducting market research and reviewing surveys, we found that men were more likely than women to make micro-donations impulsively. By honing our target audience’s behaviors and motivations, we could create an unbundling strategy for non-profit clients by incorporating micro-donations into their business model with larger male followings.

3. Evaluate products for individual components

Exploring avenues for new revenue requires product examination. How can you make a decoupled product available in a way that’s profitable for business (and useful for customers)? If you sell a physical good or service, consider how to break your product into smaller pieces. For example, a flatware manufacturer might be accustomed to selling sets of forks, knives and spoons — but some consumers might be looking to replace a single spoon.

While working with an online education company, our primary product was degree programs, but we had to think smaller — even smaller than individual courses. We asked ourselves: How can we break down a course to the smallest level? We started looking at learning objectives and divvied up the course materials in a way that aligned with each individual learning objective. For a digital marketing course, we could break it down to subjects (e.g., identify the top social media platforms, create a social media marketing plan, and create a social media calendar).

Not only were we able to bundle and unbundle the course materials, but we could actually look at different types of learners, such as auditory versus visual. By breaking down the course offerings to a finite level, we created a customized educational experience equipped with new products to sell.

4. Determine unbundled pricing

Once you have determined individual components to sell, consider price points that make the most sense based on current bundled pricing and perceived value.

Make sure the bundled offering still provides a price break, but doesn’t underestimate the value of decoupled products. If the most valuable piece of content in your e-book is a template, for example, don’t be afraid to price the template at half the cost of the entire ebook.

To start the pricing process, I typically evaluate the current pricing model, production time, and perceived value. I also advise A/B testing to see how the market responds, and adjust pricing accordingly.

5. Analyze and experiment with unbundled products

After you announce new products and pricing, continuously monitor your market. What are they buying? What bundles remain big sellers? Which ones are no longer selling?

As you introduce new offerings, continue to experiment with bundled versus unbundled products. The market and your audience’s needs are always changing. Your ability to provide what the market demands relies on the effectiveness of your ongoing research and product strategy. Remaining static is not an option.

When I launched a community for parentpreneurs, I saw a need for family-friendly business events and conferences. After holding an inaugural event, I continue to be aware of the market. If someone launches a similar event, I can tweak my offering to remain competitive.

Get ready to unbundle

Not ready to unbundle your current offerings? You can still plan for future products. When you’re creating a new offering, design a product infrastructure that will ultimately allow you to sell products in a variety of ways later. By unbundling product offerings, you have an opportunity to better serve your audience and create a viable stream of revenue for your business. It doesn’t get much better than that.

Amber Anderson is the founder and CEO of MORE, a community that helps you scale your business without sacrificing time with your family.

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The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world's most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.